April 29, 2005
Annan Won't Discipline Aide in Dispute Over Oil Documents
By WARREN HOGE 

UNITED NATIONS, April 28 - Secretary General Kofi Annan said Thursday that he had decided there were no grounds for disciplining his former chief of staff, Iqbal Riza, who was criticized by the independent committee investigating the oil-for-food program for ordering the shredding of three years of files.
While those actions were careless, I do not believe they can be construed as deliberate attempts to impede the work of the independent inquiry committee, Mr. Annan said April 19 in a letter to Mr. Riza that was released Thursday. His reference was to the panel headed by Paul A. Volcker, the former Federal Reserve chairman. I accept your apology and assure you that I still have great faith in your professionalism and well-known integrity, the letter continued. 
Mr. Riza retired in December but was potentially subject to United Nations discipline because he remains a dollar-a-year adviser.
The Volcker committee had faulted Mr. Riza because the shredded documents covered a period, 1997-9, that coincided with the early years of the program and because the shredding was conducted after a June 1, 2004, directive from Mr. Annan telling staff members to preserve documents related to the program.
Mr. Riza has said he believed the documents were copies of papers in permanent files. He said the Volcker committee was wrong to presume that the files contained documentation linked to the program.
Another official faulted by the panel, Benon V. Sevan, the program's former director, accused the United Nations on Thursday of reneging on a commitment to pay his legal fees. The promise to pay was absolute and unconditional, he said in a statement by his lawyer, Eric L. Lewis.
The United Nations announced last month that it was dropping its arrangement to cover Mr. Sevan's defense costs as of Feb. 3, the day that the committee issued a report saying that he had a grave conflict of interest and that his conduct had seriously undermined the integrity of the organization.
Mr. Annan's spokesman, Fred Eckhard, said then that Mr. Sevan had not been paid any money, even for the period before the emergence of the Volcker accusations. 
In his statement, Mr. Sevan said Mark Malloch Brown, Mr. Annan's chief of staff, had simply declared that the organization would not pay these expenses as it had agreed. It was Mr. Malloch Brown, he said, who had first urged him to bill the United Nations for the costs.
Mr. Lewis said Mr. Sevan, who has retired, had been promised reimbursement in exchange for agreeing to remain in the United States to help the Volcker inquiry.
Mr. Sevan said he had hoped to pursue his complaint privately but that he had gone public because of news reports saying he had made threats to disclose potentially damaging information about United Nations officials. This is categorically false, he declared.
Funds Misdirected, Banker Says
By The New York Times
WASHINGTON, April 28 - The bank that the United Nations hired to handle finances for the Iraqi oil-for-food program made hundreds of payments to companies in a way that violated the bank's rules, an executive told the House Committee on International Relations on Thursday.
Some mistakes were made, said the witness, Everett Schenk, chief executive of the North American branch of BNP Paribas, a global investment bank based in Paris. They should not have occurred.
In 403 of the 54,000 payments that BNP Paribas handled during the six-year program, he said, instead of going directly to the companies that had been designated by the United Nations to deliver goods to Iraq, funds were improperly paid to third parties or their banks. 
But Mr. Schenk said the supplies that these payments financed were delivered as intended. And none of these payments, he said, appeared to have been corruptly diverted, as kickbacks to Saddam Hussein's government, for example.
The problem was that the payments were made to companies that did not always have explicit approval from the United Nations to receive the money.
The program authorized the sale of $64 billion of Iraqi oil to raise money to buy food, medicine and other supplies and equipment for Iraqis.